Live from Crow’s Coffee: 435 Magazine. I was reading 435 Magazine (offices at 11775 W. 112th Street, Suite 200, Overland Park, KS 66210, ten miles away from here) on the airplane on my way back from California to Kansas City. I found myself getting scared.
The scary thing is that Los Angeles is not that very much larger than Kansas City. And yet it has about nine times the population.
Over at Equitable Growth: The extremely-sharp Dean Baker writes:
E.J. Dionne and Harold Meyerson... interesting columns... suffer from the same major error.... The loss of manufacturing jobs and downward pressure on the wages of non-college educated workers... as... the result of a natural process of globalization. This is wrong. The downward pressure on wages was the deliberate outcome of government policies designed to put U.S. manufacturing workers in direct competition with low-paid workers in the developing world. This was a conscious choice. Our trade deals could have been designed to put our doctors and lawyers in direct competition with much lower paid professionals in the developing world. READ MOAR
Over at Equitable Growth: Nick Bunker is out of the gate with his take on the surprisingly low 0.2%/year first-quarter US real GDP growth rate:
...during the recovery, we should be standing by the alarms but not quite sounding them yet. Personal consumption expenditures... contributed 1.31 percentage points... a deceleration.... Net exports were the biggest drag... 1.25 percentage points... a dramatic decrease in the level of exports.... Gross fixed investment was also a drag... shaving off 0.4 percentage points.... READ MOAR
Over at Equitable Growth The advocates for the TPP and TATIP should be making the following points:
Those are the arguments that should be made--if they can--to command general support for the TPP and the TATIP.
But, as Dean Baker points out, those are not the arguments that are being made: READ MOAR
Live from the Roasterie: And If It Snows That Stretch Down South Won’t Ever Stand the Strain…
I must confess that I had thought that Wichita would have done much better in employment during the oil boom of the past seven years:
Over at Equitable Growth: Ken Rogoff--of whom my standard line is: everything he says is very interesting, and almost everything he says is completely correct--is weighing in: on secular stagnation, the global savings glut, the safe-asset shortage, the balance-sheet recession, whatever you want to call it. His view is that excessive debt issue and overleverage are at the roots of most of our problems. He thus believes that our difficulties will end when deleverage has reduced the overhang of risky and underwater debt to a sustainable level: READ MOAR
Over at Equitable Growth: Trying to get the issues straight in my mind here...
>email@example.com: Dear Mr. Delong: I hope this note finds you well. In light of recent activity in Congress related to the Trade Promotion Authority legislation, I write to invite you to join an off-the-record conference call with XXXXXX senior staff for an update on the current state of play. The call is scheduled for today, Tuesday, April 21 at 3:45 p.m. ET
Dear Mr. White:
Thank you very much for your invitation. I will try. I will have to move a couple of things--and I am not the most important person involved in them...
But if you want to know where my concerns are, let me start by quoting something that I wrote before http://www.bradford-delong.com/2015/03/the-debate-over-the-trans-pacific-partnership.html: READ MOAR
Over at Equitable Growth: This is what Ben Friedman wrote about in the late 1970s:
...Chapter 4, on business investment... weak... [because of] a special problem of lack of business confidence, driven by fiscal worries, failure to make needed structural reforms, and maybe even careless rhetoric... [or] weak because the economy is weak[?]... The IMF comes down strongly for the second view....
But wait, there’s more.... To deal with... reverse causation... it looks for episodes of weak growth... clearly caused by... fiscal consolidation... [and] manages in passing both to refute a very widely held but false belief... that government deficits necessarily ‘crowd out’ investment, so that reducing deficits should free up funds that lead to higher investment. Not so, says the IMF: when governments introduce deficit-reduction measures, investment falls instead of rising. This says that the deficits were crowding investment in, not out... empirical confirmation of the existence of the paradox of thrift! Remarkable stuff. Someone tell Wolfgang Schäuble. READ MOAR
It could have turned out very differently.
It could have been that the money-center universal banks did understand their derivatives books. It could have been that, after the financial crisis, trust in financial intermediaries would rebuild itself quickly. It could have been that the North Atlantic's central banks would have been able to nail market expectations to a rapid return to normalcy, thus providing cash holders with powerful incentives to spend. It could even have been the case that fiscal expansion would have proven ineffective. It was Karl Smith who pointed out to me that in the guts of even the IS-LM model, fiscal policy expands
I+G private spending [satisfied, RJW?] by reducing the perceived average riskiness of and thus getting households to hold more. In the model it is guaranteed that a sovereign that issues more debt thereby necessarily reduces the perceived riskiness of average debt. In the world not. READ MOAR
The Beverly Hilton | 9876 Wilshire Blvd. | Beverly Hills, CA 90210
Tuesday, April 28, 2015 / 3:45 pm - 4:45 pm
Moderator: Josh Barro, Correspondent, New York Times
- Brad DeLong, Professor of Economics, U.C. Berkeley
- Jeremy Howard, CEO, Enlitic
- Gerald Huff, Principal Software Engineer, Tesla Motors
- Amy Webb, Digital Media Futurist; Founder, Webbmedia Group
For centuries, people have worried that new technologies will destroy jobs without creating enough new ones, and every time the doomsayers have been proven wrong. But today, with disruptive advances occurring at dizzying speed, some worry that the time may finally have come when more jobs are destroyed by technology than are created. One 2013 report by Oxford University researchers concluded that 47 percent of U.S. jobs are threatened by automation. Should workers be worried, or is the fear overblown? Is technology--from robots to intelligent digital agents--our friend or a threat? If the latter, what do we need to do to ensure employment by the middle class and others? How can we reorganize our business and economic system to avert more economic turmoil?
Tags: Information Economy, Labor Market, Economic Growth, Inequality, Rise of the Robots, Josh Barro
Over at Equitable Growth: Martin Sandbu has a truly interesting and excellent comment on my first, inital draft of thoughts for next week's Blanchard-Rajan-Rogoff-Summers "Rethinking Macroeconomics" conference.
But I do think he oversimplifies one crucial issue: dynamic efficiency.
Elementary neoclassical growth theory tells us that to the extent that patience and tolerance for intergenerational inequality between the past and the future allows, societies should try to push their accumulation of capital toward the point of the Golden Rule: the point at which the marginal product of capital r has fallen to the economy's labor-force growth rate n plus its labor productivity growth rate g. And it tells us that an economy that has pushed accumulation beyond that point--that has g+n > r--has overdone it. Such an economy is dynamically inefficient, and it should disinvest in its accumulation of capital. READ MOAR
The United States economy today is surely not dynamically inefficient as far as its private capital stock goes. Its accumulated and properly-depreciated capital stock is equal to no more than four times annual net income. The 30% of net output paid as income to capital thus sets an average net product of capital of 7.5% per year. And the marginal product of capital is unlikely to be much lower. As this is a real return, it is to be compared with the sum of the 0.75% per year labor-force growth rate and a current trend labor-productivity growth rate of 1.5% per year. We see a very substantial wedge by which r is greater than n+g, for private capital.
But we as a society and as taxpayers invest not just in private capital wealth but in the wealth of our government as well. Our investments in the wealth of our government produce cash flows through the government's infrastructure and organization. We invest in the wealth of our government by paying taxes used to build up infrastructure and organization and by buying back the debt that the government has previously issued. And it is here, I think, that the neoclassical growth-model dynamic-efficiency framework becomes relevant. The current ten-year TIPS rate for U.S. government debt is zero. Yes, that is: 0. There is no real resource cost to the U.S. government from selling a TIP today, using the money for a decade, and paying it back in 2025. n+g > r.
And n+g > r for a long, long time. Since the start of the twentieth century, only during the Great Depression has the interest on the debt as a share of its face value been more than the smoothed decade-average growth rate of the American economy.
What does this tell us about the value of using our tax money to pay down or even slow the growth rate of the national debt? Nothing good. It tells us that we taxpayers should disinvest our wealth from the government, and keep on doing so until, for claims on the government as well as for claims on the private sector, r > n + g.
But, you may ask, why is there this very wide gap between the marginal return to investments in private capital and the marginal return to investments in government wealth via paying down the government debt? Why a 7.5%/year real return on physical and organizational capital, a 5%/year return on investments in diversified equities, a 2.5%/year real return--4.5%/year nominal--on seasoned Baa corporate bonds, 0%/year real for investments in long-term government securities, and -1%/year at the moment for Treasury bonds purged of duration risk?
That is a great puzzle. It is strongly suggestive of major, major financial market dysfunction. Systematic risk can, we know, account for at most 100 basis points of that 850 basis point spread. But the origins, and the potential cures, of these enormous spreads have no bearing on the Golden Rule lessons--that it strongly looks like we need to invest a lot more in private physical and organizational capital, for the gap between 7.5% and 2.5% is far more than taxes, fees, enterprise, and other middle intermediaries can justify. And it strongly looks like we taxpayers need to invest a lot less in government wealth via being in a hurry to pay down our current debt, for the gap between 2.5% and 0% on that side is wide as well.
Over at Equitable Growth: I forgot to note Ben Zipperer's post on the labor market and the BLS Employment Report last Friday. And if I had, I would have stressed what the employment numbers tell us about how extraordinarily far to go we have before even semi-complete recovery.
Over at Equitable Growth: There have long been a bunch of hypotheses about why the American "middle class" feels "stressed" in spite of constant real incomes and what appears to me increased utility over time as more expenditure shifts toward information goods where consumer surplus is a higher multiple of factor cost:
Americans are used to seeing real incomes improve at 2%/year--doubling every generation--and they have not been getting that. Living little better than your predecessors a generation ago is an unpleasant shock.
The things that have been becoming cheaper are not seen as things key to your "middle class" status, while the things becoming more expensive and difficult to obtain--a detached house in a good neighborhood with a short commute, health insurance, secure pensions, a good education for your children--are things that it used to be taken for granted a middle-class family could get.
The widening gap between the middle class and the upper class.
Now come Emmons and Noeth with a new and very interesting hypothesis. READ MOAR
Over at Equitable Growth: DRAFT For “Rethinking Macroeconomics” Conference Fiscal Policy Panel
Comments, critiques, and suggestions very welcome…
I take my assignment to discuss “fiscal policy in the medium term” to mean that I should assume a régime in which the economy is not at the zero lower bound on safe nominal interest rates. Thus I can assume that monetary policy can adequately handle all of the demand-stabilization role.
With demand stabilization taken off the table, it seems to me that there are three big remaining questions, even if I just confine myself to the North Atlantic: READ MOAR
Over at Medium: I have a different take on Asness and Brown than Mark Buchanan does — largely because I take Asness and Brown’s claim to be just doing “climate-knowledge-free statistics” to be made in bad-faith.
Critics... well, probably better to call them "friends" have pointed out to me that last summer I didn't spend enough time linking to Dan Kervick's and Matt Brunig's contributions to the Piketty debate. I remember reading them at the time. And I cannot figure out why I didn't focus more on them--save probably because both seemed to me to be thinking along the lines I was thinking along, I didn't think that there was much new there. But usually I am anxious to promote people saying things that I think are smart and right, so it is a puzzle...
...The bearing of the foregoing theory on the first of these is obvious. But there are also two important respects in which it is relevant to the second.... The removal of very great disparities of wealth and income... through... direct taxation... [is] deterred by... the fear of making skilful evasions too much worth while... of diminishing unduly the motive towards risk-taking, but mainly, I think, by the belief that the growth of capital depends upon the strength of the motive towards individual saving, and that for a large proportion of this growth we are dependent on the savings of the rich out of their superfluity.
...We women on the farm no longer expect to work as our grandmothers did. With the high prices to be had for all kinds of timber and wood we now do not have to burn wood to save the expense of fuel, but can have our oil stove, which makes the work so much cooler in the summer, so much lighter and cleaner. There need be no carrying in of wood and carrying out of ashes, with the attendant dirt, dust and disorder.
April Fools' Festival, Day XVII: Note that the Insane Clown Posse picture at the top right is not a happy clown. This is an insane clown. And this is a somewhat dangerous clown...
Shorter Thomas Friedman: Because my cell phone company drops calls when I take the Acela, it is very important that Michael Bloomberg run for President in 2012. He should run on the platform of Obama's policies. Thus he should split the vote for those policies between two candidates, and so raise the chances for Mitt Romney--who is running against those policies--to squeak in.
...On average, title-loan borrowers pay $1,200 in fees per year on loans averaging $1,000, according to a report released Wednesday by the Pew Charitable Trusts, an independent nonprofit based in Philadelphia. The findings come as the Consumer Financial Protection Bureau plans a Thursday public hearing on payday loans...
As I have said, the extraordinary number of payday loan and title loan storefronts in Kansas City MO/KS relative to Portland OR takes me aback every time I go from one to the other. READ MOAR
Over at Equitable Growth: Each time I go directly from Kansas City, Missouri-Kansas to Portland, Oregon--or from Portland to Kansas City--I am struck by cognitive dissonance.
There is a very large gulf between what I see around me and what, say, the charts people put up on the screen for relative levels of real cost-of-living adjusted income in Kansas City and Portland. The numbers seem to say that the Kansas City MO/KS metropolitan area is about 10% richer than the Portland OR metropolitan area. But my eyes tell me that Portland is about 20% richer than Kansas City.
There are a number of possible resolutions: READ MOAR
Live from Downtown Portland: Starbucks is now also a wine bar, serving hipster staples like truffle mac & cheese and artichoke-goat cheese flatbread?! I must live in a cave…
It does make sense: having disrupted the coffee shop in the morning and afternoon, why not use the fixed and network assets to disrupt the evening wine bar business next?
I wonder if live music and slam poetry is next?
I steal my title from my esteemed ex-roommate and coauthor Robert Waldmann, who writes:
I wonder why wealthy investors vote for Republicans against their self-interest.
Brad DeLong wonders why they favor tight money and austerity against their self-interest....
Sir Terry Pratchett: April 28, 1948-March 12, 2015:
Terry Pratchett: The Pratchett Quote File v6.0: "You can't make people happy by law. If you said to a bunch of average people two hundred years ago 'Would you be happy in a world where medical care is widely available, houses are clean, the world's music and sights and foods can be brought into your home at small cost, travelling even 100 miles is easy, childbirth is generally not fatal to mother or child, you don't have to die of dental abcesses and you don't have to do what the squire tells you' they'd think you were talking about the New Jerusalem and say 'yes'.
For the record, let me say that the ten or so Terry Pratchett books that I have read have made me happy:
...TPP... will almost certainly have nothing on currency... It will not make it any easier, and could well make it more difficult, for the United States to address the trade deficit that results from having an over-valued dollar....
J. Bradford DeLong on March 12, 2015 at 09:23 AM in Economics: Growth, Economics: Inequality, Economics: Information, Economics: Macro, Obama Administration, Political Economy, Politics, Streams: Across the Wide Missouri, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (27)
| | | |
Over at Equitable Growth: It is foolish to debate whether a trade agreement that has not yet been negotiated is a good idea and should be ratified.
Such a debate should properly begin only once there is something to analyze.
But here we are, so...
Robert Allen (2009): Engels's Pause: "Abstract: The paper reviews the macroeconomic data describing the British economy from 1760 to 1913 and shows that it passed through a two stage evolution of inequality...
...In the first half of the 19th century, the real wage stagnated while output per worker expanded. The profit rate doubled and the share of profits in national income expanded at the expense of labour and land. After the middle of the 19th century, real wages began to grow in line with productivity, and the profit rate and factor shares stabilized.... Technical progress was the prime mover behind the industrial revolution. Capital accumulation was a necessary complement. The surge in inequality was intrinsic to the growth process: technical change increased the demand for capital and raised the profit rate and capital’s share. The rise in profits, in turn, sustained the industrial revolution by financing the necessary capital accumulation. After the middle of the 19th century, accumulation had caught up with the requirements of technology and wages rose in line with productivity.
Ah. Crossing my desk today, two intersecting streams. The first is unpacking a stray box and finding in it a copy of NBER Working Paper 12398...
Back in 2004, you see, George W. Bush's Council of Economic Advisers, headed by Greg Mankiw, released its 2004 Economic Report of the President--and immediately found the reporters of Washington enthusiastically throwing a low-tech necktie party, with the Bush CEA as the center of attention. In 2006 Greg and Phil Swagel wrote a good retrospective:
over offshore outsourcing connected with the release of the Economic Report of the President (ERP) in February 2004, examines the differing ways in which economists and non-economists talk about offshore outsourcing, and assesses the empirical evidence on the importance of offshore outsourcing in accounting for the weak labor market from 2001 to 2004...
In their 2004 Economic Report of the President, Greg and company made three points with respect to outsourcing, of which I count two and a half as likely correct:
J. Bradford DeLong on March 10, 2015 at 08:27 AM in Economics: Growth, Economics: Inequality, Information: Better Press Corps/Journamalism, Information: Internet, Moral Responsibility, Obama Administration, Political Economy, Politics, Streams: Across the Wide Missouri, Streams: Economics, Streams: Equitable Growth, Streams: Highlighted, Weblogs | Permalink | Comments (8)
| | | |
Over at Equitable Growth: Last week I noted my wife Ann Marie's:
...a poster child for the clear articulation and active supervision standards required to determine whether an anticompetitive policy is indeed the policy of a given state, and entitled to immunity…. North Carolina’s Dental Board functioned more as a trade association with super powers granted to it by the state–apparently with an open-ended portfolio of responsibilities relating to dentistry in the state…. The dissent argues the delegation was valid.... READ MOAR
In their essay last fall on the state of economics, Seth Ackerman and Mike Beggs charged that today’s mainstream is irredeemably captured by conservative ideology. The good news is they’re wrong — Piketty’s work testiﬁes to that.
J. Bradford DeLong on March 07, 2015 at 04:13 AM in Economics: Growth, Economics: History, Economics: Inequality, Economics: Macro, Philosophy: Moral, Political Economy, Politics, Streams: (Weekend) Reading, Streams: Cycle, Streams: Economics, Streams: Equitable Growth | Permalink | Comments (15)
| | | |
In the past year, the cyclical employment gap for prime-aged males has shrunk and is now smaller than the structural employment gap:
That is all.
Over at Project Syndicate: If we as a species can avoid nuclear war; curb those among us who are violent because they are God-maddened, state-maddened, or ethnicity-maddened; properly coordinate global action to reduce global warming from its current intolerable projected path to a tolerable one, adapt to the global warming that occurs, and distribute paying for the costs of that adaptation--well, if we can do all of those things, the human race can have a very bright future indeed.
Over at Equitable Growth: I have always been impressed by vir illustris Mark Hoekstra's regression-discontinuity story of the value of being admitted to U.T. Austin. As the very sharp Jordan Weissman reports:
...AM I DOOMED? Actually, yeah. You might be.... Mark Hoekstra... compared the earnings of white, male students who had barely missed the admissions cut-off for an unnamed public flagship university to those of students who had barely been accepted.... Enrolling at the flagship increased wages by 20 percent... READ MOAR
Socialism has demonstrated its right to victory, not on the pages of Das Kapital, but in an industrial arena comprising a sixth part of the earths surface--not in the language of dialectics, but in the language of steel, cement and electricity. Even if the Soviet Union, as a result of internal difficulties, external blows and the mistakes of leadership, were to collapse--which we firmly hope will not happen--there would remain an earnest of the future this indestructible fact, that thanks solely to a proletarian revolution a backward country has achieved in less than 10 years successes unexampled in history.
Over at Equitable Growth: OK: Now that I am awake and coherent and caffeinated, we may resume...
I draw somewhat different conclusions from the wavering track of potential GDP since 1990 than do the viri illustres Steve Cecchetti and Kermit Schoenholtz:
First, I think that monetary policymakers should not be looking at potential output and the output gap at all. They should be looking at the labor market. You can determine whether monetary policy is such as to accord with people's previous expectations and thus balance supply and demand in the labor market much more easily than you can track whether actual production and demand are above or below what your retrospective estimate of potential output will turn out to be.
Over at Equitable Growth: There are the different agendas at different time frames--say two years, ten years, and fifty years. The smart young whippersnapper Marshall Steinbaum reports on the growing consensus that dealing with the Rise of the Robots is on our fifty-year agenda, and not on our two-year or our ten-year agenda. On the two-year and ten-year agendas, he says, are dealing with and reversing the enormous upward redistribution that has taken place with the rise in the social, political, and economic power of the Overclass. That is:
Underlying this position is a belief, perhaps, that so much of what is produced is so close to a joint Leontief product that something like the marginal product theory of distribution is profoundly unhelpful, and that questions of distribution are overwhelmingly resolved by economic bargaining power conditioned by social mores and politically-chosen institutions. Perhaps there used to be three sources of bargaining power, and thus three sources of durable advantage:
And then, perhaps, over the past generation the third has dropped away, with the coming of globalization and the successful war against private sector unions. The rest are now themselves in flux. And perhaps they have been joined as a source of rent-extraction by those with the ability to tap into the savings produced in this age of the Global Savings Glut...
But I think that the sources of this enormous upward redistribution have not yet been properly sorted-out.
...when it comes to the consequences of rapid technological change on the U.S. workforce... techno-optimist[s].. [and] the pessimistic view that better technology substitutes for workers and... harms them. A debate between the two... was probably what the organizers intended for an event last week hosted by The Brookings Institution’s Hamilton Project entitled ‘The Future of Work in the Age of the Machine.’... Yet the debate last week actually highlighted a third position. If either the techno-optimists or the techno-pessimists are right, then we should see a major positive impact on worker productivity. But it just isn’t there... [even though] we definitely see worker displacement, stagnant earnings, a failing job ladder, rising inequality at the top, ‘over-education’ (workers taking jobs for which they’re historically overqualified), and declining rates of employment-to-population and household and small business formation.... Former Treasury Secretary Larry Summers made this point forcefully....
So if not technology, what explains labor displacement?... Market practices and public policies that favor managers over workers, and those who make their living by owning capital over those who make their living by earning wages. That choice lurks behind the decline in full employment as a priority... a shift in the legal standards, mores, and incentives of corporate management in favor of the interests of [equity] owners over other stakeholders... the abandonment of long-term productive investment as a priority in public budgeting.... In 1988, Summers wrote an article fleshing out the idea that the division of rents between corporate stakeholders is what drives rising inequality. More than a quarter century later, he could not have been more prescient. The good news is that if such a profound shift played out over only three or four decades, then it’s reversible. That wouldn’t be true if it were the result of the technological trends detailed in [Brynjolffson and McAfee's] ‘The Second Machine Age.’... We know what needs to be done and how to do it, because we’ve done it before...
Peter Temin's "Two Views of the Industrial Revolution" is a very good paper.
Crafts, Harley, and by now many others--most recently the scarily-smart Robert Allen--have argued that technological change during the British Industrial Revolution was largely confined to the leading sectors. They are opposed by Ashton, Landes, and many, many others--most recently the truly-scarily-smart Joel Mokyr--arguing that the British Industrial Revolution was a broad-based sea-change in economy and society as a whole. The stakes are rather large.
...hysteria surrounding the idea is that a huge wave of automation, technology and skills have lead to a huge structural change in the economy since 2010. The implicit argument here is that robots and machines have both made traditional demand-side policies irrelevant or naïve, and been a major driver of wage stagnation and inequality. Though not the most pernicious story that gained prominence as the recovery remained sluggish in 2010 to 2011, it gained important foothold among elite discussion.
Robert Allen: Farm to Factory: A Summary
Over at Equitable Growth: Mid-nineteenth century Massachusetts transcendentalist author and activist Henry David Thoreau’s response to the coming of the railroad was: “get off my lawn!”:
To make a railroad round the world.... Men have an indistinct notion that if they keep up this activity of joint stocks and spades long enough all will at length ride somewhere in next to no time and for nothing, but though a crowd rushes to the depot and the conductor shouts “All aboard!” when the smoke is blown away and the vapor condensed, it will be perceived that a few are riding, but the rest are run over--and it will be called, and will be, “a melancholy accident”...
Indeed, the very first day of operation of the Liverpool and Manchester Railroad, September 15, 1830, George Stephenson’s locomotive, The Rocket, killed the Right Honorable William Huskisson, former President of the Board of Trade--that is, he had been Britain’s Secretary of Commerce (in addition to Secretary of State for War and the Colonies, and Leader of the House of Commons). READ MOAR
Over at Equitable Growth: I see that the vir illustris Lawrence Mishel, our neighbor here in the Great Center-Left Atrium Building at 1333 H St. N.W., has had his ire awakened by the femina clarissima Melissa Kearney and her forthcoming Hamilton Project event on robots tomorrow: http://www.hamiltonproject.org/papers/future_of_work_in_machine_age/...
Over at Equitable Growth: I had always thought that dynamic scoring was a bad idea because it leads to a ratchet--Democrats when they are in power claim deficit reduction from a stronger economy if their policies are enacted , and then Republicans when they are in power claim deficit reduction from a stronger economy if they undo what the Democrats did. You have no chance of getting policy-effect forecasts that are unbiased on average if you allow the party in power to shape CBO's estimates of macroeconomic impacts.
The vir clarissimus Robert Lynch has a good look at all the other issues in this can of worms: READ MOAR
...The book documents that the rate of return on private capital r exceeds the economy’s growth rate g.... He reasons that if r > g, the wealth of the capitalist class will grow faster than the incomes of workers, leading to an “endless inegalitarian spiral.”... Piketty’s logic... will seem strange to any economist trained in the neoclassical theory of economic growth.... r > g should be familiar... as a steady-state condition as long as the economy does not save... an excessive amount of capital... [a] dynamically inefficient situation, all generations can be made better off by reducing the economy’s saving rate...
Over at Equitable Growth: Something has bothered me ever since I read the highly-eminent and highly-esteemed David Autor's "Polanyi's Paradox and the Shape of Employment Growth":
David Autor (2014): Polanyi’s Paradox and the Shape of Employment Growth: "[The] human tasks that have proved most amenable to computerization...
...are those that follow explicit, codifiable procedures.... Tasks that have proved most vexing to automate are those that demand... skills that we understand only tacitly.... The interplay between machine and human comparative advantage allows computers to substitute for workers in performing routine, codifiable tasks while amplifying the comparative advantage of workers in supplying problem solving skills, adaptability, and creativity. Understanding this interplay is central to interpreting and forecasting the changing structure of employment in the U.S. and other industrialized countries.... READ MOAR
Over at Equitable Growth: I have a new list of three articles that bring you up to speed on the current state of the process of assessing and assimilating Thomas Piketty's Capital in the Twenty-First Century:
...between r and g is indeed one of the important forces that can explain historical magnitudes and variations in wealth inequality: in particular, it can explain why wealth inequality was so extreme and persistent in pretty much every society up until World War I.... That said, the way in which I perceive the relationship between r > g and wealth inequality is often not well-captured in the discussion that has surrounded my book--even in discussions by research economists.... For example, I do not view r > g as the only or even the primary tool for considering changes in income and wealth in the 20th century, or for forecasting the path of income and wealth inequality in the 21st century. Institutional changes and political shocks--which can be viewed as largely endogenous to the inequality and development process itself.... READ MOAR